UNDER THE MICROSCOPE: As Americans pay more and more for gas, Life Detective investigates how the global oil market works and identifies a different, equally critical fuel to which we are addicted, use daily, and access to which depends nearly 100% upon imports: coffee.

Imagine it: you get up, get in your car to drive to work, and then stop to fuel up. You pull into the lot of your favorite refueling vendor, take a look at the price sign . . . and you are suddenly in shock! You rub the golden slumbers from your eyes to make sure you saw it correctly: $4.59! Holy crap! It was just $4.09 last week! Either there is a war in Brazil that is pushing prices up or perhaps you just pulled into Starbucks rather than the cheaper alternative. Though you feel as if you are volunteering to be mugged, you pay the price. You have no choice: you need your coffee to perk you up and complete the daily grind.

The coming coffee crisis

Exactly how important is coffee in America? A latte! The National Coffee Association (yep, that’s a thing) commissioned a report which found that coffee is the most commonly consumed beverage in the U.S. (even more than tap water).  Coffee-related economic activity comprises 1.6% of the total U.S. gross domestic product! The coffee industry is directly responsible for nearly 1.7 million U.S. jobs, not including those who seem to blend coffee and remote work at the local coffee house. 7 in 10 Americans drink coffee every week. Joe is apparently the best friend of 62% of Americans who drink coffee every day, on average 3 cups daily.  America runs on Dunkin’!

Knowing that coffee is to the human motor what gasoline is to the automotive engine, it is scary to also realize that less than 1% of American coffee is domestically produced. Hawaii is the only state with significant coffee production. Puerto Rico’s coffee producing ability is but a drip, having bean reduced by 80% due to hurricanes. Among the nations of the world, the U.S. is the largest coffee importer, the venti among mere grande and tall countries. Primarily for reasons of climate, domestic coffee growth is not very practical. There is no espresso route to coffee independence, but a crisis is brewing! Write your congressman, phone the White House! We must moch-a difference!

The Current Oil Crisis

While the coming coffee calamity is just percolating, there is no doubt that we jittery Americans are currently in a gas frenzy! To some extent, the frothing is justified. Increased gas prices impact the overall economy. Many products are impacted by increased transport costs to get the item produced and to consumers. If you drive to work, or your work is driving like being a trucker or Uber driver, your expenses have gone up significantly. If you drive a Jeep Grand Cherokee, it may now cost you $100 to fill up your 24-gallon tank whereas one year ago it cost about $50. You’d better strike oil quick – your annual gas cost may have gone from $2600 to $5200!

Although justified in their despair, we unrefined Americans do what we usually do in times of crisis: seek out crude Facebook memes to vent our frustration. The problem is, maybe because the “meme-theme” is promoted by politically or financially motivated sources, there is a lot of misinformation fueling division. That’s where Life Detective comes in . . . to drill down and extract the right info to level-set the masses before it becomes combustible. So, here are some basics on the oil market:

  • The U.S. is a net exporter of petroleum. Oil is still imported, in part because of the different types of petroleum are fit for different purposes. For example, imported Russian oil is used primarily in plastics production. (Russian oil imports increased after the U.S. cut off Venezuelan imports.);
  • From where do we import oil? The largest source of U.S. oil imports is Canada, which by the way is not merely the 51st state nor a giant amusement park above America;
  • What’s in the pipeline? There already is a Keystone pipeline that brings Canadian oil to US refineries. While the additional Keystone XL pipeline might play a role in future production and reduce reliance on Russian or other oil sources outside of North America, it would take years to build it: it doesn’t significantly affect the current crisis;
  • Wells are deep subjects. It can take months to years to produce oil from a new well, especially if site selection and preparation is included in the calculation. Thus, a well project started today is a long time away from turning into a gusher and impacting pricing;
  • Go frack yourself! One slick irony. Higher oil prices increase the likelihood of more domestic and North American oil production. This is because getting oil from shale fracking (e.g., North Dakota) or oil sands extraction (e.g., in Alberta, Canada) are the most expensive methods to extract oil. When oil is above $70, $80 or $100 a barrel, extracting the oil becomes more economically feasible and even lucrative (i.e., that’s capitalism!)

Ultimately, the oil market price is still set globally meaning most countries cannot wall themselves off from price volatility. Thus, the game is rigged and “they” have us over a barrel.

Coffee and gas prices – Americans must suck it up!

The spillover between oil and coffee is substantial, going beyond both being black liquids. In both cases, we are addicted to fuels with pricing determined by the global marketplace. No matter how pumped-up we get, in neither case will domestic production flow fast enough to make us absolutely free of global market forces.  It is our patriotic duty to suck it up during Putin’s war in Ukraine and pay at the pump and perhaps do more to reduce our oil dependency. As for java, a 21st Century band of patriots must come together to form a new “Coffee Party”. We must turn our nervous energy and sleepless nights into a movement to preserve coffee access. Sorry, Boston: we will storm ships to seize coffee rather than throw it overboard. You see, I am an Italian-American and not a Brit . . . therefore, coffee is my cup of tea!